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A Closer Look — Measurement of expected credit losses for intercompany loan assets with no documented contractual term

Published on:
09 May 2019

In consolidated financial statements, intercompany loans eliminate. Hence, there is no intercompany loan asset in consolidated financial statements that requires a classification and expected credit loss assessment. However, when entities prepare their separate financial statements these intercompany positions do not eliminate and the reporting entity that is a lender needs to assess any intercompany loan assets for classification and potentially measurement of expected credit losses under IFRS 9.

In this publication, we focus on how to assess the expected credit loss of an intercompany loan asset with no stated terms in separate financial statements.